To circumambulate literally means to 'walk around.' The principle involves making a clear and conscious connection with something that is regarded as special. This is often a physical object but it could also be a person. In a religious context 'the thing' would be seen as especially related to or embodying the transcendent qualities aspired to. In a more mundane situation one could go round a dwelling say as part of a blessing.

Objects commonly circumambulated:

Stupas - in my experience this is the most common.

Buddha images, or shrines in general.

Holy mountains, e.g. Mt Kailash in Tibet.

The nice thing about circumambulation is that it is incredibly simple - you just walk around something you consider to be special in some way; anyone can do that, even small children.

Circumambulation is often an aspect of a more specific ceremony or celebration. For example to mark the end of the vassa (rains) period there would be a traditional sequence of events related to that situation and a circumambulation would often be the evening's 'finale.'A path from the temple to the stupa would be lit with lanterns and candles and the stupa itself may have been decorated as well. The community would all carry incense and a light of some sort, processing along the lighted path, perhaps chanting a mantra, perhaps a bell would be rung intermittently, or perhaps just moving quietly through the night. The stupa would be circled three times (in respect to the triple gem) and we would finish by placing our light and incense at the base of the stupa and then stand together in a full circle around the stupa. As many Buddhist celebrations take place on the full moon night the whole business of circumambulation can be very beautiful.